The gross and net NPAs of all scheduled commercial banks have risen to Rs 3,475 crore and Rs 2,394 crore, respectively, in 2000-01
A larger amount of credit dispensed by private sector banks in 2000-01 turned into non-performing assets (NPAs), compared to the credit from the public sector banks, says the Economic Survey.
Overall, the rise in the incremental gross and net non-performing assets of the banking sector is one of the major concerns.
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The increase in gross and net NPAs of all scheduled commercial banks was Rs 3,475 crore and Rs 2,394 crore, respectively, in 2000-01, up from Rs 1,686 crore and Rs 2,053 crore, respectively, in 1999-2000. The rise was mainly due to the increase in NPAs of private sector banks.
The incremental ratio of gross NPAs to gross advances of public sector banks (PSBs) increased from 2.4 per cent in 1999-2000 to 2.8 per cent in 2000-01.
But in case of the old and new private sector banks, the rise was from 0.5 per cent to 14 per cent and from 0.9 per cent to 7.8 per cent of gross advances, respectively.
The incremental ratio of net NPAs to net advances declined from 3.6 per cent in 1999-2000 to 2.9 per cent in 2000-01 in the case of PSBs, while it increased from 0.8 per cent to 9.2 per cent and 0.3 per cent to 3.7 per cent in respect of old and new private sector banks.
The proportion of gross and net NPAs to assets for the old private sector banks remained unchanged at 5.2 per cent and 3.3 per cent, respectively, in 2000-01.
For the new private sector banks, gross NPAs to assets ratio increased from 1.6 per cent in 1999-2000 to 2.1 per cent in 2001-02.
The ratio of net NPAs to total assets increased to 1.2 per cent during this period.
FLASH POINT
The road ahead
Even India's current growth rates may be difficult to sustain without significant changes. The first concern is the possible slowdown in factor productivity growth in agriculture, associated with environmental problems.
Also, environmental degradation arising from inefficient and distortionary energy, water and fertiliser subsidies adversely affects the economy's capacity to grow. A second concern is the apparent slowdown in growth in the poorer states.
Continuance of these trends will slow the growth of overall factor productivity and the rise in incomes, as well as push up relative prices of agricultural commodities, to the detriment of poor consumers.
Macroeconomic stability and vulnerability to internal and external developments are also important issues in sustaining India's growth.
India's fiscal deficit and the increasing use of borrowings to finance public sector consumption, notably inefficient subsidies that often probably increase inequality, raise concerns. Key elements in increasing growth and reducing poverty will be:
a) further reduction in India's high protection
b) liberalisation of internal markets, particularly agriculture and labour
c) improved infrastructure to better the links between domestic and external markets
d) widespread improvement of social services.